The Impact of a Company’s Name on its Stock Price

The Words “Technology” and “Holdings” Boost Stocks

Stock market activity this year reveals that a company’s name may have a significant impact on its stock price.

Companies with the words “technology” or “technologies” in their names have seen their shares rise by 18% year-to-date and 35% over the past 12 months. Additionally, companies with the word “holdings” in their names have seen their shares go up 4% year-to-date. This could be because “holdings” implies diversification, which is attractive to investors during times of uncertainty.

The Words “International” and “Industries” May Hurt Stock Prices

In contrast, companies whose names contain the words “international” or “global” have seen a 15% year-to-date drop, and a 4% year-over-year decline, perhaps because investors are worried about the pandemic’s impact on global business.

Companies with “industries” or “motors” in their names have fallen 8% and 9% year-to-date, respectively. These words tend to be associated with old economy sectors.

Zooming Out

It’s important to remember that correlation does not imply causation when examining these trends. Many automakers with the word “motors” in their name have struggled during the ongoing pandemic, but that would likely be the case even if they had different names. However, it is interesting to note that Tesla (TSLA), which has outperformed its fellow carmakers on the stock market, does not have the word “motors” in its name.

The idea that company names impact investor psychology is nothing new. In a 2000 academic study, analysts found that adding “.com” to the end of a company’s name boosted the value of its stock. It is possible that during times when it is difficult to predict the future of the economy, the impact of a company’s name on investor sentiment is even stronger than usual.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS080603